FundSvcs Community

Hello.  

I am writing a few instructions (procedures vs. policies) for our operations and fundraising groups and need some assistance with accepting real estate.  

In most instances, real estate will be sold as quickly as possible.  This will require that we file a form 8282 with the IRS and provide a copy to the donor.

I have been attempting to determine what the tax deductibility impact to the donor would be in this instance. 

For other types of property, if the property is sold within 3 years, the donor would need to recapture his tax deduction from prior years to the Cost Basis of the donated item (vs. being able to deduct the full FMV).  Is this also true with real estate?  I have not been able to find anything specific to real estate even though a majority of donated real estate properties are clearly sold before 3 years.

I would greatly appreciate any information or references anyone has about this.

Thank you all for your expertise and willingness to share with all of us!

Best,

------------------------------
Dale Hailey
Business Intelligence Analyst
Sutter Health Philanthropy
dale.hailey@sutterhealth.org
------------------------------

Original Message:
Sent: 10/26/2022 1:09:00 PM
From: Dale Hailey
Subject: Donor Impact when filing a Form 8282 for Real Estate

Hello.  

I am writing a few instructions (procedures vs. policies) for our operations and fundraising groups and need some assistance with accepting real estate.  

In most instances, real estate will be sold as quickly as possible.  This will require that we file a form 8282 with the IRS and provide a copy to the donor.

I have been attempting to determine what the tax deductibility impact to the donor would be in this instance. 

For other types of property, if the property is sold within 3 years, the donor would need to recapture his tax deduction from prior years to the Cost Basis of the donated item (vs. being able to deduct the full FMV).  Is this also true with real estate?  I have not been able to find anything specific to real estate even though a majority of donated real estate properties are clearly sold before 3 years.

I would greatly appreciate any information or references anyone has about this.

Thank you all for your expertise and willingness to share with all of us!

Best,

------------------------------
Dale Hailey
Business Intelligence Analyst
Sutter Health Philanthropy
dale.hailey@sutterhealth.org
------------------------------

Original Message:
Sent: 10/26/2022 1:25:00 PM
From: John H. Taylor
Subject: RE: Donor Impact when filing a Form 8282 for Real Estate

You should not be explaining tax implications to donors.  I would not write any policy that attempts to address that issue.

As I understand it, there are two IRS concerns the 8282 attempts to address.  The first is to confirm that the donated property was - or was not - used for related purposes.  How property is or is not used can impact a donor's deduction.

The second is to serve as a red flag of sorts if the value claimed by the donor on an 8283 is substantially more than the value you report on the 8282.

However, what the IRS will do regarding the donor is between the IRS and the donor.  Our policies should simply outline our requirements for executing section IV of the 8283 and filing an 8282 when the circumstance require it.

John

John H. Taylor

Principal

John H. Taylor Consulting, LLC

2604 Sevier St.

Durham, NC   27705

johntaylorconsulting@gmail.com

919.816.5903 (cell/text)

Serving the Advancement Community Since 1987

Original Message:
Sent: 10/26/2022 1:09:00 PM
From: Dale Hailey
Subject: Donor Impact when filing a Form 8282 for Real Estate

Hello.  

I am writing a few instructions (procedures vs. policies) for our operations and fundraising groups and need some assistance with accepting real estate.  

In most instances, real estate will be sold as quickly as possible.  This will require that we file a form 8282 with the IRS and provide a copy to the donor.

I have been attempting to determine what the tax deductibility impact to the donor would be in this instance. 

For other types of property, if the property is sold within 3 years, the donor would need to recapture his tax deduction from prior years to the Cost Basis of the donated item (vs. being able to deduct the full FMV).  Is this also true with real estate?  I have not been able to find anything specific to real estate even though a majority of donated real estate properties are clearly sold before 3 years.

I would greatly appreciate any information or references anyone has about this.

Thank you all for your expertise and willingness to share with all of us!

Best,

------------------------------
Dale Hailey
Business Intelligence Analyst
Sutter Health Philanthropy
dale.hailey@sutterhealth.org
------------------------------

Thanks John,

Yep.  I get it.  Thank you for the excerpt from the handbook.   It might be a handy reference to have!  

Best, Dale

------------------------------
Dale Hailey
Business Intelligence Analyst
Sutter Health Philanthropy
dale.hailey@sutterhealth.org
------------------------------

Original Message:
Sent: 10-26-2022 12:30 PM
From: John Taylor
Subject: Donor Impact when filing a Form 8282 for Real Estate

I knew I had saved a reference guide that covers this!  PlannedGiving.com published a "Real Estate Donations - 47 Critical Questions" handbook a few years ago.  Here's the Q&A on this particular topic:

John H. Taylor

Principal

John H. Taylor Consulting, LLC

2604 Sevier St.

Durham, NC   27705

johntaylorconsulting@gmail.com

919.816.5903 (cell/text)

Serving the Advancement Community Since 1987

Original Message:
Sent: 10/26/2022 1:25:00 PM
From: John H. Taylor
Subject: RE: Donor Impact when filing a Form 8282 for Real Estate

You should not be explaining tax implications to donors.  I would not write any policy that attempts to address that issue.

As I understand it, there are two IRS concerns the 8282 attempts to address.  The first is to confirm that the donated property was - or was not - used for related purposes.  How property is or is not used can impact a donor's deduction.

The second is to serve as a red flag of sorts if the value claimed by the donor on an 8283 is substantially more than the value you report on the 8282.

However, what the IRS will do regarding the donor is between the IRS and the donor.  Our policies should simply outline our requirements for executing section IV of the 8283 and filing an 8282 when the circumstance require it.

John

John H. Taylor

Principal

John H. Taylor Consulting, LLC

2604 Sevier St.

Durham, NC   27705

johntaylorconsulting@gmail.com

919.816.5903 (cell/text)

Serving the Advancement Community Since 1987

Original Message:
Sent: 10/26/2022 1:09:00 PM
From: Dale Hailey
Subject: Donor Impact when filing a Form 8282 for Real Estate

Hello.  

I am writing a few instructions (procedures vs. policies) for our operations and fundraising groups and need some assistance with accepting real estate.  

In most instances, real estate will be sold as quickly as possible.  This will require that we file a form 8282 with the IRS and provide a copy to the donor.

I have been attempting to determine what the tax deductibility impact to the donor would be in this instance. 

For other types of property, if the property is sold within 3 years, the donor would need to recapture his tax deduction from prior years to the Cost Basis of the donated item (vs. being able to deduct the full FMV).  Is this also true with real estate?  I have not been able to find anything specific to real estate even though a majority of donated real estate properties are clearly sold before 3 years.

I would greatly appreciate any information or references anyone has about this.

Thank you all for your expertise and willingness to share with all of us!

Best,

------------------------------
Dale Hailey
Business Intelligence Analyst
Sutter Health Philanthropy
dale.hailey@sutterhealth.org
------------------------------

The rules on mission-related use, three-year sale window, charitable deduction recapture to cost basis, etc. are for donations of tangible personal property (art, coins, collectibles, etc.) and gifts-in-kind, but not for gifts of real estate. 

A charity still needs to submit the 8282 "tattletale" form to the IRS after it sells donated real estate (assuming the sale is done within three years, which as you mention is often the case) so that the IRS can compare a charity's sale price to the donor's claimed appraised value/deduction amount. 

But, I agree with John that this isn't something you should try to educate staff on too much (you shouldn't totally rely on my input either...although I'm 99.9% certain I am correct!).  That said, it is unavoidable to talk taxes at some level with donors who are considering gifts of non-cash assets... the entire planned giving fundraising space has been built around it.  Staff -- including/especially the planned giving staff -- should always tell donors to seek their own tax counsel when discussing these topics.

------------------------------
Tom Yates
Temple University
Executive Director of Gift Planning
215-926-2545
tyates@temple.edu
------------------------------

Original Message:
Sent: 10-26-2022 12:09 PM
From: Dale Hailey
Subject: Donor Impact when filing a Form 8282 for Real Estate

Hello.  

I am writing a few instructions (procedures vs. policies) for our operations and fundraising groups and need some assistance with accepting real estate.  

In most instances, real estate will be sold as quickly as possible.  This will require that we file a form 8282 with the IRS and provide a copy to the donor.

I have been attempting to determine what the tax deductibility impact to the donor would be in this instance. 

For other types of property, if the property is sold within 3 years, the donor would need to recapture his tax deduction from prior years to the Cost Basis of the donated item (vs. being able to deduct the full FMV).  Is this also true with real estate?  I have not been able to find anything specific to real estate even though a majority of donated real estate properties are clearly sold before 3 years.

I would greatly appreciate any information or references anyone has about this.

Thank you all for your expertise and willingness to share with all of us!

Best,

------------------------------
Dale Hailey
Business Intelligence Analyst
Sutter Health Philanthropy
dale.hailey@sutterhealth.org
------------------------------

Thank you Tom.  I thought there might be a difference because donated real estate is so often sold as quickly as possible and donors are told of all the tax advantages (on charity websites).  But I haven't seen any caveat about a downside for resale.  

I do not intend to provide any guidance or counsel to staff (and I don't interface wiih donors), but it is helpful to understand the potential impacts.

Happy Friday eve!

Best, Dale

------------------------------
Dale Hailey
Business Intelligence Analyst
Sutter Health Philanthropy
dale.hailey@sutterhealth.org
------------------------------

Original Message:
Sent: 10-27-2022 08:44 AM
From: Tom Yates
Subject: Donor Impact when filing a Form 8282 for Real Estate

The rules on mission-related use, three-year sale window, charitable deduction recapture to cost basis, etc. are for donations of tangible personal property (art, coins, collectibles, etc.) and gifts-in-kind, but not for gifts of real estate. 

A charity still needs to submit the 8282 "tattletale" form to the IRS after it sells donated real estate (assuming the sale is done within three years, which as you mention is often the case) so that the IRS can compare a charity's sale price to the donor's claimed appraised value/deduction amount. 

But, I agree with John that this isn't something you should try to educate staff on too much (you shouldn't totally rely on my input either...although I'm 99.9% certain I am correct!).  That said, it is unavoidable to talk taxes at some level with donors who are considering gifts of non-cash assets... the entire planned giving fundraising space has been built around it.  Staff -- including/especially the planned giving staff -- should always tell donors to seek their own tax counsel when discussing these topics.

------------------------------
Tom Yates
Temple University
Executive Director of Gift Planning
215-926-2545
tyates@temple.edu

Original Message:
Sent: 10-26-2022 12:09 PM
From: Dale Hailey
Subject: Donor Impact when filing a Form 8282 for Real Estate

Hello.  

I am writing a few instructions (procedures vs. policies) for our operations and fundraising groups and need some assistance with accepting real estate.  

In most instances, real estate will be sold as quickly as possible.  This will require that we file a form 8282 with the IRS and provide a copy to the donor.

I have been attempting to determine what the tax deductibility impact to the donor would be in this instance. 

For other types of property, if the property is sold within 3 years, the donor would need to recapture his tax deduction from prior years to the Cost Basis of the donated item (vs. being able to deduct the full FMV).  Is this also true with real estate?  I have not been able to find anything specific to real estate even though a majority of donated real estate properties are clearly sold before 3 years.

I would greatly appreciate any information or references anyone has about this.

Thank you all for your expertise and willingness to share with all of us!

Best,

------------------------------
Dale Hailey
Business Intelligence Analyst
Sutter Health Philanthropy
dale.hailey@sutterhealth.org
------------------------------